Pressure on firms to lift local content

Pressure on firms to lift local content - The West Australian

Contractors will come under further pressure to buy Australian with an upcoming Federal Government plan, as some major companies reveal they already have up to 96 per cent local content on some projects.

Commerce Minister Simon O'Brien yesterday said he would welcome any initiative to boost local content, especially in steel fabrication, but said many contractors already had an impressive record.

The plan is expected to add to the bottom line at a time of skyrocketing costs, which helped to blow out Chevron's Gorgon project by $9 billion.

The so-called innovation statement, due next month, falls short of mandating local content levels but is expected to require big companies to lodge industry participation plans outlining their use of domestic goods and services.

Mr O'Brien said onshore projects had about 80 per cent local content and some offshore projects reached 50 per cent.

Fortescue Metals Group claims 96 per cent local content on the Chichester expansion and Rio Tinto claims 85 per cent local content on a range of its Pilbara iron ore projects. Woodside said it had spent more than $7.6 billion locally on its Pluto LNG Project, and expected 80 per cent of operational expenditure to remain in Australia. Chevron claimed Gorgon had already committed $18 billion locally, and its Wheatstone project had so far committed $8 billion domestically.

Mr O'Brien said local business Georgiou, which recently won a contract for the Wheatstone project, showed it was possible to beat low-cost rivals in Asia.

Georgiou precast general manager Mark Wheeler said the local sector was able to compete with the low Asian wages largely because WA contractors were not subject to the same transport costs, and had better standards and safety records. The company will provide jacking pipe segments, manufactured in Malaga, for the construction of the micro tunnel at the Wheatstone Project.